<PAGE>
Letter to Shareholders
February 7, 1994
Dear Shareholder:
In the shadow of rising federal income taxes, demand for municipal securities
grew enormously in 1993. At the same time, money market rates dropped to
historical lows -- a result of the past recession and last year's slow and
unsteady economic recovery. Despite this, the Prudential Tax-Free Money-Fund
continued to earn competitive current-income yields.
Fund Performance as of December 31, 1993
<TABLE>
<CAPTION>
7-Day
Total Net Current Tax Equivalent Yield Weighted
Assets (mil) Yield @31% @36% @39.6% Avg. Mat.
<S> <C> <C> <C> <C> <C> <C>
Tax-Free
Money Fund $601.6 2.21% 3.2% 3.45% 3.66% 63 days
</TABLE>
Note: an investment in the Fund is neither insured or guaranteed by the U.S.
government and there can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share. Past performance is not an
indicator of future results.
The Prudential Tax-Free Money Fund seeks high current income, exempt from
federal income taxes, and consistent with the preservation of principal and
liquidity by investing in a diversified portfolio of short-term municipal
securities.
The Fund's level of credit quality remained consistently high during the last 12
months. As of December 31, 1993, 97% of the Fund's holdings were rated in the
highest quality tier, as determined by at least two major rating agencies, or if
non-rated, deemed to be of comparable quality to first tier issues by the
adviser. The remainder were considered second-tier quality.
The Economy and the Federal Reserve
Throughout most of 1993, mixed and variable economic data pointed to an economy
that was plodding through a sluggish and fitful recovery. As the year
progressed, forecasters steadily lowered their economic growth rate projections.
Fourth quarter statistics revealed remarkable economic progress, with the
preliminary annual GDP growth rate increasing considerably to 5.9% from a
revised 2.9% rate in the third quarter.
During the year, the two short-term interest rate benchmarks--the fed funds rate
(the inter-bank lending rate) and the discount rate (the cost of funds borrowed
from the Federal Reserve)--remained at 3.0%. Fearful of hampering the
economic recovery, the Fed waited until February 1994 to increase
-1-
<PAGE>
short-term rates. The Fed has made it clear it will take further action if
inflation rises.
Short-Term Municipal Markets and the Fund
While both the economic climate and Fed policy play important roles in the
short-term municipal markets, their influence is limited. Although low Fed
rates generally lead to lower municipal yields, seasonal supply and demand
fluctuations for municipals can dominate yield movements in the municipal
markets. Thus, we adjusted your Fund's weighted average maturity based on our
expectations for these annual cycles. This strategy helped to minimize yield
volatility and maximize returns.
In anticipation of taxpayer withdrawals last April to cover tax liabilities and
an accompanying rise in interest rates, we shortened your Fund's maturity. As
yields rose toward mid-year we bought longer-term money market securities to
lock in higher rates and help avoid the traditionally lower yields of Summer.
Since many municipalities match their fiscal year to the school calendar, a bulk
of short-term securities mature on June 30. The resulting scarce supply
generally drives rates to low levels until later in the summer.
Tax-free yields had dropped significantly by October as treasury yields reached
record lows, but soon reversed and drifted upward as their year-end cycle began
to take hold. The market also faced typical end-of-year redemptions, as
investors sold bonds for cash to meet holiday needs and institutions reduced
their inventories to bolster their cash positions. We used this opportunity to
shorten the Fund's average maturity and capture some yield as rates rose.
Managed Diversification Adds Value
We continually monitor the credit quality of states and localities, attempting
to take advantage of the Fund's geographical flexibility to add benefit and
reduce risk. For example, we tend to avoid securities from California,
reflecting our concern over its current weak economy. The accompanying pie
chart highlights your Fund's five largest holdings by state as of year end.
Looking Ahead to 1994
Although the economy grew exceptionally well during the fourth quarter of 1993,
inflation remains under control. With these key ingredients in place, the
economy should continue to strengthen this year. Inflationary pressures
generally follow on the heels of growth, and given the Fed's interest in curbing
inflation, it may move to raise short-term rates by midyear. Since the
short-term municipal market is driven primarily by its own unique cyclical
factors, it tends to lag the comparable taxable markets in reacting to most Fed
actions. Despite this, we expect yields to drift somewhat higher this year.
However, we anticipate a temporary, but strong downward pressure on rates in the
first quarter of 1994, as many investors re-enter the municipal market, and
short-term cash flows increase from coupon payments and called-bond proceeds.
-2-
<PAGE>
On another note, the Securities and Exchange Commission has proposed the
adoption of regulatory amendments for all tax-exempt money market funds to help
ensure that liquidity, high quality and safety of principal can be maintained.
It is anticipated that these regulations will be enacted during 1994.
As always, it is a pleasure to have you as a shareholder of the Prudential
Tax-Free Money Fund, and to take this opportunity to report our activities.
Sincerely,
Lawrence C. McQuade
President
Richard S. Lynes
Portfolio Manager
-3-
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND Portfolio of Investments
December 31, 1993
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
ALABAMA--2.6%
Alabama Hsg. Fin. Auth.,
Sngl. Fam. Mtge. Rev.,
A.N.N.M.T.,
3.10%, 10/1/94,
A-1+* $ 15,585 Ser. 91-D1............ $ 15,585,000
------------
ARIZONA--0.8%
Maricopa Cnty. Poll.
Ctrl.
Corp., Pub. Svc. Co.,
A.N.N.O.T.,
3.10%, 8/1/94, Ser.
VMIG1 5,000 85A................... 5,000,000
------------
CALIFORNIA--6.4%
California Poll. Ctrl.
Rev. Fin.
Auth., Chevron USA
Inc., A.N.N.O.T.,
2.50%, 6/15/94, Ser.
P-1 5,000 84B................... 4,994,688
Los Angeles Int'l.
Arpt.,
LAX Two Proj., F.R.D.D.,
VMIG2 18,700 4.75%, 1/3/94........... 18,700,000
San Diego Multifamily
Hsg.
Rev., Louisiana
Cima Apts., F.R.W.D.,
3.55%, 1/6/94, Ser.
VMIG2 3,605 85K................... 3,605,000
Student Education Loan
Marketing Corp.,
Student Loan Rev.,
A.N.N.M.T.,
2.65%, 11/1/94, Ser.
VMIG1 11,200 A..................... 11,200,000
------------
38,499,688
------------
COLORADO--3.4%
Avon Cnty. Ind. Dev.
Rev.,
Beaver Creek Proj.,
F.R.M.D.,
P-1 $ 4,500 2.60%, 1/18/94, Ser. 84....... $ 4,500,000
Colorado Hsg. Fin. Auth.,
Multifamily Hsg. Rev.,
S.E.M.O.T.,
Aa 10,910 2.90%, 4/1/94, Ser. 92A..... 10,910,000
Aa 5,000 2.90%, 4/1/94, Ser. 92A3.... 5,000,000
---------------
20,410,000
---------------
CONNECTICUT--0.8%
Connecticut St. Spec. Assmt.
Unemployment,
Compensation Adv. Fund Rev.,
A.M.B.A.C.,
A-1+* 5,100 2.70%, 2/15/94, Ser. A...... 5,100,000
---------------
DISTRICT OF COLUMBIA--1.5%
Dist. of Columbia Hsg. Fin.
Agcy., Carmel Plaza,
F.R.W.D.,
VMIG1 8,830 3.05%, 1/6/94, Ser. 91........ 8,830,000
---------------
FLORIDA--1.6%
Florida Mun. Pwr. Agcy. Rev.,
Stanton II Proj.,
F.R.W.D.,
VMIG1 4,000 3.30%, 1/6/94, Ser. 1018...... 4,000,000
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
FLORIDA (cont'd.)
Sarasota Cnty. Pub.
Hosp.
Dist. Rev., Sarasota
Memorial Hosp.,
T.E.C.P.,
2.70%, 1/12/94, Ser.
P-1 $ 5,400 85B................... $ 5,400,000
------------
9,400,000
------------
GEORGIA--6.4%
Cobb Cnty. Dev. Auth.
Rev.,
Institute of Nuclear
Pwr., F.R.W.D.,
3.20%, 1/5/94, Ser.
NR 7,985 92.................... 7,985,000
De Kalb Cnty. Dev.
Auth.,
General Motors,
F.R.W.D.,
3.60%, 1/4/94, Ser.
VMIG2 10,305 85.................... 10,305,000
Fulco Hosp. Auth.,
St. Joseph Hosp.,
T.E.C.P.,
2.65%, 1/12/94, Ser.
VMIG1 4,445 89.................... 4,445,000
Fulton Cnty. Dev. Auth.
Rev.,
Robert W. Woodruff Art,
F.R.W.D.,
3.20%, 1/6/94, Ser.
NR 10,000 93.................... 10,000,000
Roswell Hsg. Auth.
Multifamily Rev.,
Rosemont Hsg. Rev.
Rfdg., F.R.W.D.,
3.25%, 1/6/94, Ser.
A-1* 5,500 93.................... 5,500,000
------------
38,235,000
------------
ILLINOIS--13.9%
Chicago O'Hare Int'l.
Arpt.,
Amer. Airlines Inc.,
F.R.D.D.,
4.00%, 1/3/94, Ser.
P-2 4,645 84B................... 4,645,000
Elmhurst Illinois Rev.,
Joint Commission
Healthcare, F.R.W.D.,
VMIG1 $ 18,800 3.20%, 1/6/94, Ser. 88........ $ 18,800,000
Hazel Crest Vlg. Rev.,
Waterford Estates Proj.,
F.R.W.D.,
VMIG1 7,500 3.15%, 1/7/94, Ser. 92A....... 7,500,000
Illinois Dev. Fin. Auth.,
Orleans Multifamily Hsg.
Rev., F.R.W.D.,
A-1+* 17,020 3.15%, 1/7/94, Ser. 92........ 17,020,000
Illinois Ed. Facs. Auth. Rev.,
National College Education,
F.R.W.D.,
A-1+* 11,100 2.90%, 1/6/94, Ser.89......... 11,100,000
Illinois Hlth. Facs. Auth.
Rev., Evanston Hosp.,
S.E.M.M.T.,
VMIG1 5,000 2.65%, 5/5/94, Ser. 87E....... 5,000,000
Wheeling Multifamily Hsg.
Rev., Woodland Creek II,
F.R.W.D.,
SP-1+* 9,655 3.50%, 1/7/94, Ser. 90........ 9,655,000
Woodridge Dupage Cntys.,
Multifamily Hsg. Rev.
Rfdg., Hinsdale Terr.
Apts., F.R.W.D.,
NR 10,000 3.15%, 1/7/94, Ser. 90........ 10,000,000
---------------
83,720,000
---------------
IOWA--1.5%
Iowa Gen. Oblig.,
T.R.A.N.,
MIG1 9,000 3.25%, 6/30/94, Ser. 93A...... 9,013,765
---------------
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
LOUISIANA--1.3%
Louisiana Hsg. Fin. Agcy.,
Sngl. Fam. Mtge. Rev. Rfdg.,
A.N.N.M.T.,
VMIG1 $ 7,900 2.65%, 6/2/94, Ser. 92A....... $ 7,900,000
---------------
MAINE--3.8%
Biddeford Res. Rec. Rev.,
Energy Rec. Co. Proj.,
F.R.M.D.,
VMIG1 23,000 2.75%, 1/3/94, Ser. 85........ 23,000,000
---------------
MARYLAND--5.6%
Baltimore Cnty. Poll. Ctrl.
Rev.,
Baltimore Gas & Elec. Co.,
T.E.C.P.,
VMIG1 3,600 2.70%, 1/4/94, Ser. 85........ 3,600,000
Maryland St. Cmnty. Dev.
Auth., Multifamily Hsg.
Rev., S.E.M.O.T.,
Aa 5,265 2.80%, 5/15/94, Ser. 84B...... 5,265,000
Sngl. Fam. Mtge. Rev.,
S.E.M.O.T.,
Aa 10,090 2.90%, 4/1/94, Ser. 85-2...... 10,090,000
Aa 6,790 2.90%, 4/1/94, Ser. 87-2...... 6,790,000
Montgomery Cnty. Hsg.,
Sngl. Fam. Mtge. Rev.,
F.R.W.D.,
NR 7,600 3.30%, 1/6/94, Ser. PA40...... 7,600,000
---------------
33,345,000
---------------
MASSACHUSETTS--4.0%
Massachusetts Hsg. Fin. Agcy.,
Sngl. Fam. Hsg. Rev.,
A.N.N.M.T.,
VMIG1 4,650 2.95%, 9/1/94, Ser. 25........ 4,650,000
Q.T.R.O.T.,
Aaa $ 6,600 2.70%, 3/1/94, Ser. 5......... $ 6,600,000
Massachusetts Ind. Fin.
Agcy., Poll. Ctrl. Rev.,
New England Pwr. Co.,
T.E.C.P.,
VMIG1 13,000 2.55%, 1/27/94, Ser. 93A...... 13,000,000
---------------
24,250,000
---------------
MICHIGAN--2.6%
Grand Rapids Econ. Dev.
Corp., Ind. Dev. Rev.
Rfdg., F.R.W.D.,
Aa2 7,500 3.20%, 1/6/94, Ser. 92........ 7,500,000
Michigan Strategic Fd., Poll.
Ctrl. Rev., General Motors
Proj., F.R.W.D.,
VMIG2 8,335 3.25%, 1/4/94, Ser. 85........ 8,335,000
---------------
15,835,000
---------------
MINNESOTA--2.2%
Minnesota Gen. Oblig.,
F.R.W.D.,
NR 5,980 3.45%, 1/5/94, Ser. 6......... 5,980,061
Minnetonka Multifamily Hsg.
Rev., Cliffs Ridgedale
Proj., F.R.W.D.,
A-1* 7,000 3.50%, 1/7/94, Ser. 85A....... 7,000,000
---------------
12,980,061
---------------
MISSOURI--5.3%
Missouri Econ. Dev.,
Export & Infrastructure
Facs. Rev., F.R.W.D.,
VMIG1 9,450 3.25%, 1/5/94, Ser. 92A....... 9,450,000
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
MISSOURI (cont'd.)
Missouri St. Environ. Impvt.
& Energy Res. Auth.,
Union Elec. Co.,
A.N.N.O.T.,
P-1 $ 5,500 2.65%, 6/1/94, Ser. 84A....... $ 5,500,000
P-1 7,500 2.65%, 6/1/94, Ser. 84B....... 7,500,000
T.E.C.P.,
P-1 9,370 2.40%, 1/5/94, Ser. 85B....... 9,370,000
---------------
31,820,000
---------------
NEBRASKA--1.5%
Nebraska Investment Fin.
Auth., Briarhurst
Candletree Proj.,
S.E.M.M.T.,
A-1* 9,190 3.00%, 4/1/94, Ser. 85........ 9,190,000
---------------
NEVADA--1.2%
Nevada Hsg. Dev.,
Sngl. Fam. Mtge. Rev.,
S.E.M.O.T.,
AA* 7,100 2.95%, 4/1/94, Ser. 88-1A..... 7,100,000
---------------
NEW YORK--0.9%
New York City, Gen. Oblig.,
F.R.D.D.,
VMIG1 1,800 4.00%, 1/3/94, Ser. 94A-4..... 1,800,000
New York St. Energy Res. &
Dev. Auth., LILCO Proj.,
A.N.N.M.T.,
VMIG1 3,835 2.50%, 3/1/94, Ser. 85A....... 3,835,000
---------------
5,635,000
---------------
NORTH CAROLINA--3.2%
Cabarrus Cnty. Ind. Facs.
Auth., Poll. Ctrl. Rev.
Phillip Morris Proj.,
F.R.W.D.,
P-1 $ 5,000 3.20%, 1/5/94, Ser. 92........ $ 5,000,000
North Carolina Eastern
Municipal Pwr., T.E.C.P.,
P-1 7,200 2.55%, 1/11/94................ 7,200,000
Rockingham Cnty. Ind. Facs.,
Poll. Ctrl. Rev., Phillip
Morris Proj.,
P-1 7,200 3.20%, 1/5/94, F.R.W.D........ 7,200,000
---------------
19,400,000
---------------
OHIO--1.4%
Toledo-Lucas Cnty.,
Convntn. & Visitors
Bureau, M.T.H.O.T.,
VMIG1 8,445 2.55%, 2/1/94, Ser. 88........ 8,445,000
---------------
OKLAHOMA--3.4%
Oklahoma Political Subdiv.,
Cash Mgmt. Trust,
SP-1+* 12,390 3.35%, 6/30/94, Ser. 93....... 12,413,763
Tulsa Pub. Facs. Auth.,
Solid Waste Sys. Rev.,
S.E.M.M.T.,
VMIG1 7,825 2.85%, 5/2/94, Ser. 88........ 7,825,000
---------------
20,238,763
---------------
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
PENNSYLVANIA--6.8%
Beaver Cnty. Ind. Dev. Auth.,
Poll. Ctrl. Rev., Toledo
Edison Proj., M.T.H.M.T.,
A-1* $ 11,000 2.50%, 3/16/94, Ser. 92E...... $ 11,000,000
Emmaus Gen. Auth. Rev.,
F.R.W.D.,
A-1* 7,000 3.45%, 1/5/94, Ser. 89C5...... 7,000,000
Philadelphia Gas Wks. Rev.,
T.E.C.P.,
P-1 4,800 2.30%, 2/2/94, Ser. A......... 4,800,000
Philadelphia, T.R.A.N.,
MIG1 10,000 3.25%, 6/15/94, Ser. A........ 10,022,000
Quakertown Hosp. Auth.,
F.R.W.D.,
VMIG1 8,200 3.10%, 1/4/94, Ser. 85........ 8,200,000
---------------
41,022,000
---------------
SOUTH DAKOTA--0.8%
So. Dakota Hsg. Dev. Auth.,
Homeownership Mtge.,
S.E.M.O.T.,
Aa 5,000 2.80%, 5/1/94, Ser. 86C....... 5,000,000
---------------
TEXAS--3.3%
Brazos River Texas Harbor
Nav. Dist., Dow Chemical Co.
Proj., T.E.C.P.,
P-1 2,200 2.50%, 4/26/94, Ser. 91....... 2,200,000
Greater East Texas,
Higher Ed. Auth., Student
Ln. Rev., A.N.N.M.T.,
VMIG1 8,000 2.55%, 5/1/94, Ser. 92A....... 8,000,000
Southeast Texas Hsg. Fin.
Corp., Banc One Corp.,
Tax Exempt Trust,
F.R.W.D.,
Aaa $ 9,795 3.20%, 1/6/94, Ser. 91D....... $ 9,795,000
---------------
19,995,000
---------------
UTAH--3.7%
Intermountain Pwr. Auth.
Pwr. Supply Rev.,
Ser. 85E,
VMIG1 4,500 2.55%, 3/15/94, S.E.M.O.T..... 4,500,000
VMIG1 10,000 2.70%, 6/15/94, A.N.N.O.T..... 10,000,000
Ser. 85F,
VMIG1 2,000 2.10%, 1/7/94, T.E.C.P........ 1,999,400
Salt Lake City Rev.,
T.E.C.P.,
VMIG1 5,600 2.55%, 1/11/94, Ser. 90....... 5,600,000
---------------
22,099,400
---------------
VIRGINIA--2.8%
Chesterfield Cnty. Ind. Dev.
Auth., Phillip Morris
Proj., F.R.W.D.,
P-1 6,500 3.20%, 1/5/94................. 6,500,000
Virginia Hsg. Dev. Auth.,
Comnwith. Mtge. Rev.,
S.E.M.M.T.,
VMIG1 10,000 2.95%, 5/12/94, Ser. C-3...... 10,000,000
---------------
16,500,000
---------------
WASHINGTON--5.2%
Washington Gen. Oblig.,
Q.T.R.O.T.,
A-1+* 9,000 2.80%, 4/4/94, Ser. G......... 9,000,000
</TABLE>
-8- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (a) (Note 1)
<C> <C> <S> <C>
WASHINGTON (cont'd.)
Washington Hsg. Fin. Comn.,
Sngl. Fam. Mtge. Rev.,
A.N.N.M.T.,
SP-1+* $ 9,230 2.60%, 6/10/94, Ser. 92B...... $ 9,230,000
Washington Public Pwr.
Supply, F.R.W.D.,
NR 13,046 3.45%, 1/5/94, Ser. 5......... 13,046,425
---------------
31,276,425
---------------
WISCONSIN--4.6%
Madison Met.Tax & Rev.,
T.R.A.N.
NR 8,000 3.00%, 2/22/94, Ser. 93....... 8,005,775
Wisconsin Gen. Oblig.,
F.R.W.D.,
VMIG1 9,000 3.00%, 1/6/94, Ser. 93-3...... 9,000,000
Wisconsin Hsg. & Econ. Dev.
Auth., Home Ownership
Rev., S.E.M.O.T.,
Aa 10,875 2.80%, 3/1/94, Ser. 90D....... 10,875,000
---------------
27,880,775
---------------
Total Investments--102.5%
(amortized cost $616,705,877;
Note 1)..................... 616,705,877
Liabilities in excess of other
assets--(2.5%).............. (15,083,995)
---------------
Net Assets--100%.............. $ 601,621,882
---------------
---------------
<FN>
(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Co.
A.N.N.M.T.--Annual Mandatory Tender
A.N.N.O.T.--Annual Optional Tender
F.R.D.D.--Floating Rate (Daily) Demand Note**
F.R.M.D.--Floating Rate (Monthly) Demand Note**
F.R.W.D.--Floating Rate (Weekly) Demand Note**
M.T.H.M.T.--Monthly Mandatory Tender
M.T.H.O.T.--Monthly Optional Tender
S.E.M.M.T.--Semi-Annual Mandatory Tender
S.E.M.O.T.--Semi-Monthly Tender Offer
T.E.C.P.--Tax-Exempt Commercial Paper
T.R.A.N.--Tax & Revenue Anticipation Note
Q.T.R.O.T.--Quarterly Tax & Reserve Optional Tender
* Standard & Poor's Rating.
** For purposes of amortized cost valuation, the maturity date of these
instruments is considered to be the later of the next date on which the
security can be redeemed at par, or the next date on which the rate of
interest is adjusted.
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current Statement of Additional Information contains a description of
Moody's and Standard and Poor's ratings.
</TABLE>
-9- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets December 31, 1993
-----------------
<S> <C>
Investments, at value................................................................. $ 616,705,877
Receivable for investments sold....................................................... 12,021,222
Receivable for Fund shares sold....................................................... 8,088,553
Interest receivable................................................................... 2,997,179
Prepaid expenses...................................................................... 17,565
-----------------
Total assets...................................................................... 639,830,396
-----------------
Liabilities
Bank overdraft........................................................................ 21,282,876
Payable for Fund shares reacquired.................................................... 16,132,852
Due to Manager........................................................................ 294,437
Accrued expenses...................................................................... 272,022
Dividends payable..................................................................... 194,256
Due to Distributor.................................................................... 32,071
-----------------
Total liabilities................................................................. 38,208,514
-----------------
Net Assets............................................................................ $ 601,621,882
-----------------
-----------------
Net assets were comprised of:
Common stock, $.01 par value........................................................ $ 6,017,162
Paid-in capital in excess of par.................................................... 595,604,720
-----------------
Net assets, December 31, 1993....................................................... $ 601,621,882
-----------------
-----------------
Net asset value, offering price and redemption price per share ($601,621,882
divided by 601,716,161 shares
of common stock issued and outstanding; 3 billion shares authorized)................ $1.00
-----------------
-----------------
</TABLE>
See Notes to Financial Statements.
-10-
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
December 31,
Net Investment Income 1993
-----------
<S> <C>
Income
Interest............................. $18,773,851
-----------
Expenses
Management fee....................... 3,632,856
Distribution fee..................... 908,214
Transfer agent's fees and expenses... 425,000
Custodian's fees and expenses........ 125,000
Registration fees.................... 85,000
Franchise taxes...................... 65,000
Audit fee............................ 47,000
Reports to shareholders.............. 40,000
Directors' fees...................... 30,200
Insurance............................ 23,000
Legal fees........................... 20,000
Miscellaneous........................ 3,521
-----------
Total expenses..................... 5,404,791
-----------
Net investment income.................. 13,369,060
Realized Gain on Investments
Net realized gain on investment
transactions......................... 237
-----------
Net Increase in Net Assets
Resulting from Operations.............. $13,369,297
-----------
-----------
</TABLE>
See Notes to Financial Statements.
PRUDENTIAL TAX-FREE MONEY FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
Increase (Decrease) ----------------------------------
in Net Assets 1993 1992
--------------- ---------------
<S> <C> <C>
Operations
Net investment
income............. $ 13,369,060 $ 17,432,261
Net realized gain
on securities
transactions..... 237 109,098
--------------- ---------------
Net increase in net
assets resulting
from
operations....... 13,369,297 17,541,359
--------------- ---------------
Dividends to
shareholders....... (13,369,297) (17,432,261)
--------------- ---------------
Fund share
transactions (at
$1.00 per share)
Net proceeds from
shares
subscribed....... 2,398,092,847 1,989,624,621
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends........ 12,745,371 16,898,883
Cost of shares
reacquired....... (2,423,549,007) (2,009,166,930)
--------------- ---------------
Net decrease in net
assets from Fund
share
transactions....... (12,710,789) (2,643,426)
--------------- ---------------
Total decrease....... (12,710,789) (2,534,328)
Net Assets
Beginning of year.... 614,332,671 616,866,999
--------------- ---------------
End of year.......... $ 601,621,882 $ 614,332,671
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Financial Statements.
-11-
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
Notes to Financial Statements
Prudential-Bache Tax-Free Money Fund, Inc., doing business as Prudential
Tax-Free Money Fund (the ``Fund''), is registered under the Investment Company
Act of 1940 as a diversified, open-end management investment company. The
investment objective of the Fund is to attain the highest level of current
income that is exempt from federal income taxes, consistent with liquidity and
preservation of capital. The Fund will invest in short-term tax-exempt debt
securities of state and local governments. The ability of the issuers of the
securities held by the Fund to meet their obligations may be affected by
economic or political developments in a specific state, industry or region.
Note 1. Accounting The following is a summary
of significant accounting Policies
policies followed by the Fund in the preparation
of its financial statements.
Securities Valuation: Portfolio securities are valued at amortized cost, which
approximates market value. The amortized cost method of valuation involves
valuing a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of any discount or premium.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on an identified cost basis. Interest income is recorded on an
accrual basis.
Federal Income Taxes: It is the Fund's policy to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its net income to its shareholders. For this
reason and because substantially all the Fund's gross income consists of
tax-exempt interest, no federal income tax provision is required.
Dividends: The Fund declares dividends daily from net investment income. Payment
of dividends is made monthly.
Reclassification of Capital Accounts: Effective January 1, 1993, the Fund began
accounting and reporting for distributions to shareholders in accordance with
Statement of Position 93-2: Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions by
Investment Companies. As a result of this statement, the Fund changed the
classification of distributions to shareholders to better disclose the
differences between financial statements amounts and distributions determined in
accordance with income tax regulations. The effect caused by adopting this
statement was to decrease paid-in capital by $846,050 and decrease accumulated
net realized loss on investments by $846,050 compared to amounts previously
reported through December 31, 1992. Net investment income, net realized gains
and net assets were not affected by this change.
Note 2. Agreements The Fund has a management
agreement with Prudential Mutual Fund Management,
Inc. (``PMF''). Pursuant to this agreement PMF has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PMF has entered into a subadvisory agreement with Prudential
Investment Corporation (``PIC''); PIC furnishes investment advisory services in
connection with the management of the Fund. PMF pays for the cost of the
subadviser's services, the compensation of officers of the Fund, occupancy and
certain clerical and bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
The management fee paid PMF is computed daily and payable monthly. For the
period through August 31, 1993 the management fee was paid at an annual rate of
.50 of 1% of the Fund's average daily net assets. Effective September 1, 1993,
PMF revised the fee structure to be paid at an annual rate of .50 of 1% of the
Fund's average daily net assets up to $750 million, .425 of 1% of the next $750
million of average daily net assets and .375 of 1% of average daily net assets
in excess of $1.5 billion.
PMF has agreed that, in any fiscal year, it will reimburse the Fund for
expenses (including the fees of PMF, but excluding interest, taxes, brokerage
commissions, distribution fees, and litigation and indemnification expenses and
other extraordinary expenses) in excess of the most restrictive expense
limitation imposed by state securities commissions. The most restrictive expense
limitation is presently believed to be 2 1/2% of the Fund's average daily net
assets up to $30 million, 2% of the next $70 million of average daily net assets
and 1 1/2% thereafter. Such expense reimbursement, if any, will be estimated and
accrued daily. No reimbursement was required due to such limitation for the year
ended December 31, 1993.
The Fund has a distribution agreement with Prudential Mutual Fund
Distributors, Inc. (``PMFD''). To reimburse PMFD for its expenses incurred
pursuant to a plan of distribution, the Fund pays PMFD a reimbursement, accrued
daily and payable monthly, at an annual rate of .125 of 1% of the Fund's average
daily net assets. PMFD pays various
-12-
<PAGE>
broker-dealers, including Prudential Securities Incorporated (``PSI'') and Pruco
Securities Corporation, affiliated broker-dealers, for account servicing fees
and other expenses incurred by such broker-dealers. PMFD is a wholly-owned
subsidiary of PMF; PSI, PMF and PIC are (indirect) wholly-owned subsidiaries of
The Prudential Insurance Company of America.
Note 3. Other Prudential Mutual Fund
Services, Inc. (``PMFS''), a Transactions With
wholly-owned subsidiary of Affiliates
PMF, serves as the Fund's transfer agent and
during the year ended December 31, 1993, the Fund incurred fees of $376,057 for
the services of PMFS. As of December 31, 1993, approximately $32,000 of such
fees were due to PMFS. Transfer agent fees and expenses in the Statement of
Operations include certain out-of-pocket expenses paid to non-affiliates.
Note 4. Federal The cost of securities for
federal income tax purposes Income Taxes
is substantially the same as for financial
reporting purposes.
-13-
<PAGE>
PRUDENTIAL TAX-FREE MONEY FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
---------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income and realized gains................... .018 .026 .041 .053 .056
Dividends and distributions to shareholders................ (.018) (.026) (.041) (.053) (.056)
---------- -------- -------- -------- --------
Net asset value, end of year............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------
TOTAL RETURN:#............................................. 1.86% 2.63% 4.22% 5.42% 5.74%
Ratios/Supplemental Data:
Net assets, end of year (000).............................. $ 601,622 $614,333 $616,867 $700,859 $653,268
Average net assets (000)................................... $ 726,571 $669,588 $725,844 $701,869 $644,820
Ratios to average net assets:
Expenses, including distribution fee..................... .74% .74% .75% .74% .78%
Expenses, excluding distribution fee..................... .62% .62% .63% .61% .66%
Net investment income.................................... 1.84% 2.60% 4.15% 5.30% 5.65%
<FN>
- ---------------
# Includes reinvestment of dividends and distributions.
</TABLE>
See Notes to Financial Statements.
-14-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Prudential Tax-Free Money Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Tax-Free Money Fund
(``the Fund'') at December 31, 1993, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
``financial statements'') are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1993 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
1177 Avenue of the Americas
New York, New York
February 16, 1994
-15-
<PAGE>
TAX INFORMATION
We are required by the Internal Revenue Code to advise you within 60 days of
the Fund's fiscal year end (December 31, 1993) as to the federally-exempt
interest dividends received by you during such fiscal year. Accordingly, we are
advising you that all dividends paid during the fiscal year were
federally-exempt interest dividends.
Information with respect to the state taxability of your investment in the
Fund was sent to you under separate cover.
-16-
<PAGE>
Directors
Delayne D. Gold
Arthur Hauspurg
Harry A. Jacobs, Jr.
Thomas J. McCormack
Lawrence C. McQuade
Stephen P. Munn
Louis A. Weil, III
Officers
Lawrence C. McQuade, President
David W. Drasnin, Vice President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Ronald Amblard, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributor
Prudential Mutual Fund Distributors, Inc.
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
One Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852
Collect (908) 417-7555
This report is not authorized for distribution
to prospective investors unless preceded or
accompanied by a current prospectus.
74436P103 MF103E
Cat. #444003E
- -
- -
- -
Prudential
Tax-Free
Money Fund
- ------------------------------------------------
Prudential Mutual Funds
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